Kevin HaydonCEO International, Philips Healthcare
Developed Markets Overview Japan, Europe, and High Growth Countries
Kevin HaydonCEO International, Philips Healthcare
2
Agenda
• Introduction• International market overview• Key strategies in International• Summary
3
Introduction
International markets: A mixed picture• Global downturn is adversely affecting International markets• Further impact expected in western Europe and Japan• Some pockets of growth, supported by government stimulus programs• We expect to return to modest growth in 2010
We are well-positioned due to established key strategies• Growth in services business• Care cycle solutions build clinical case• Philips Healthcare Solutions portfolio builds business case• Realizing customer centricity• Growth in mid- and low-end segment
We are adjusting our cost structure and investmentsin line with the realities of the market
*2008, combination of internal and external data
4
International Market OverviewPositive market developments in central Europe, ASEAN, Middle East and Africa
> 3% mkt growth
*Source: Combination of internal and external data
Germany• Government stimulus package positive
impact on addressable healthcare market (€115m*)
• Opportunities in cardiology and oncology
Poland• EU funding• Increase in privatization
Africa• Aid funding market• Penetration of private chains• Development of rural areas
Saudi Arabia/Middle East• Strong growth drivers (government
programs, investments in healthcare infrastructure)
• Growing private initiatives• Slowdown in Dubai
ASEAN• Medical tourism growing• Renewal of healthcare infrastructure• Harmonization of regulations across
region
5
International Market OverviewSouth-west Europe and Nordic markets stabilizing
-3% to +3% mkt growth
*Source: Combination of internal and external data
Iberia• Market affected by downturn and
construction industry recession• Concentrated buying and bundled deals• Investments in clinical areas and new
hospitals
Adria• Centralized purchasing (CONSIP)• Declining reimbursements• Investments in oncology (i.e. screening
programs)• Opportunities in private market
France• Public hospital reorganization and budget
freeze (T2A)• Private market opportunities• Investments in oncology and digital
mammography screeningNordics• Uncertain environment: government
funding mixed
6
International Market OverviewNorth-west Europe, Japan and Australia are negatively impacted
< -3% mkt growth
*Source: Combination of internal and external data
Japan• Economy severely hit• Changes in buying behavior
and budgeting• Government stimulus package
in total on healthcare = €6.4bn*• New reimbursement for
advance applications
Korea• Stricter FDA regulations• Government driving healthcare
as new growth engine
UK• Private market affected by downturn• Public NHS group buying extended• Managed Services opportunities
Benelux• Pressure on hospital budgets• Delays and downsizing of hospital
construction• Rise of private initiatives and risk
sharing models• Home Healthcare opportunities
Australia• Government funding issues for public health• Government stimulus package impact in total
on healthcare = €3.2bn*
7
Related value drivers/root causes
Demographics and lifestyle
Politics
Change in business models• Rationalization of healthcare
delivery models• Professionalized procurement• Disease-related funding• Partnerships and outsourcing
Professionalization
Change in clinical applications• Chronic disease management• Mental diseases• Oncology• Cardiology• Elderly care
Expanded value proposition• Philips Healthcare Solutions• Integral care cycle solutions • “Patient and care provider-driven” profile• Services business and new service propositions• Mid- and low-end segment
Segmented our market approach• Key account management• Multi-channel strategy• Strong high-end position• Customer centricity at the front-end• Lifecycle orientation
Change in healthcare structure• Privatization, Liberalization • Consolidation• Specialization • Patient becomes healthcare
consumer
Profitable Growth
Healthcare Paradigm Shift in Mature Markets
Accessibility, Quality
8
Focus on Pockets of Growth
Size: €6.1B
Size: €2.3B
Size: €2.0B
Oncology
Size: €1.3B
Radiology
Cardio-logy
Rest Onco-Size: €6.1B
Size: €2.3B
Size: €2.0B
Radiology
Cardiology
OtherOncology
• ASEAN, eastern Europe, and Middle East show strong growth overall
• Pockets of growth in specific regions and clinical areas in western Europe
• Japan shows opportunities in cardiac imaging centers
• New hospital building accounts for 10-15%* of total imaging market
• Global opportunities in turnkey, managed service and pay per use solutions
• Services growing at above average rate
International market size and growth(Excludes services and home healthcare)
International market share and growth by segment**
Market Growth
Mar
ket S
hare
8600
8800
9000
9200
9400
2007 2008 2009 2010-2%
-1%
0%
1%
2%
3%
4%Market Size (€M) Market Growth %
*Source: Combination of internal and external data**08 vs 07, combination of internal and external data
9
Well-Positioned to Capitalize on Specific Opportunities
• Utilization• Remote services• Learning services• Asset
performance• Business
performance• Installed base• Lifecycle
management
• Integral clinical solutions
• Better outcomes, lower cost
• Focus on cardiology & oncology
• New CT, Ultrasound and Patient Monitoring portfolios
• Dedicated channel structure
• Innovative services model
• Mediquip®Turnkey solutions
• MediServ®Managed Services
• MediGo® Pay per Use
• Customization• Specific products,
services, support, education & consulting
• Customer teams and KAM
Services business
Care cycles
Philips Healthcare Solutions
Customer centricity
Mid- and low-end
10
Recent Successes: Capitalizing on Specific Opportunities
Services business
Recently signed €23 million, 10-year
managed service contract with the
Hospital de la Santa Creu i Sant Pau,
Barcelona
Philips Healthcare SolutionsCare cycles
Kaizen study at YaesuMedical Center in Tokyo results in
significant efficiency improvement
Malta’s Mater Dei Hospital recently
became a reference site for our complete ‘door to treatment’
solution
11
Recent Successes: Capitalizing on Specific Opportunities
Mid-range ultrasound system launched at
Arab Health. Low-end 16-slice CT shipments
up and running
Customer centricity
Mid- and low-end portfolio
In the UK we increased NPS. Closed loop NPS
has now been rolled out in all of our Key
Markets
12
Summary
Market overview• We are being impacted by global downturn• While we expect further impact in Japan and western
Europe in 2009, there are still growth opportunities in several markets and clinical areas
• We expect a return to modest growth in 2010
Our approach• We are on track with implementing five key strategies
that match fundamental market needs• We are adjusting our cost structure and investments
in line with the realities of the market
Our ambition is to grow fasterthan the market
1313